The Global Urbanist

News and analysis of cities around the world


Opening Asian cities up to foreign knowledge workers: Kuala Lumpur and Ho Chi Minh

Rowan Fraser discusses a promising trend in Asian cities successfully attracting foreign knowledge workers to spur knowledge-based local development, though some cities need to focus their strategies, and many will have to answer the social questions about housing inequality and cosmopolitanism that now emerge.

Rowan Fraser

Cities: Kuala Lumpur, Singapore, Ho Chi Minh City

Topics: Local economic development, Labour and livelihoods, Information and technology, Poverty and inequality, Citizenship and migration

The financial services centre in Ho Chi Minh, a city aspiring to develop a knowledge-based economy. Photo: Linda Vega Orozco
Regional offices of multinationals in Cyberjaya, in Kuala Lumpur's Multimedia Super Corridor. Photo: Syefri Zulkefli (CC BY-SA 2.0)
Putrajaya in Kuala Lumpur's Multimedia Super Corridor enjoys many new facilities and abundant greenspace. Photo: Linda Vega Orozco
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An increasing number of cities in Asia are seeking to strengthen their local economies with various forms of knowledge-based development. One aspect of this trend is the growing role of foreign knowledge workers — knowledge migrants — including migrants from the Americas, Europe, Africa and other parts of Asia.

One such "knowledge city" programme is Kuala Lumpur's Multimedia Super Corridor (MSC), a special economic zone in Malaysia. This ambitious development programme responds to Malaysia's Vision 2020, which aims at claiming the status of developed nation by 2020. In many ways the MSC is representative of the ambitions and challenges of creating knowledge-based urban development in Asia and opens the wider question of what a truly global, knowledge-based Asian city would look like.

Knowledge migrants provide the cornerstone

Started in 1996, the MSC seeks to import foreign knowledge workers and investment in the ICT (information communication and technology) and services sectors. The MSC covers an area of 750 km² stretching from Kuala Lumpur International Airport to the city centre. It comprises a handful of smaller towns, including Cyberjaya and Putrajaya, and operates using a couple of straightforward mechanisms to attract foreign firms and knowledge workers. These include scholarships and incentives for students and researchers, and fiscal mechanisms to attract firms and knowledge workers — a bid to improve the labour markets and skills base of the area. Companies that open operations in the MSC area receive "MSC status" which exempts them from currrency restrictions and grants them a tax-free status for the first ten years of operation. MSC status also reduces immigration red tape for foreign knowledge workers in these firms. Between 1996 and 2006, the MSC generated approximately 22,000 jobs and attracted more than a thousand international companies.

The programme has been supported by the establishment of new cities within the MSC area to act as centres for certain sectors. One such city is Cyberjaya, which promotes itself as an ICT hub at regional and global levels. Styling itself as an ICT city is helped greatly by the presence of a number of ICT-focused universities, including Limkokwing University of Creative Technology, Multimedia University, and Cyberjaya University College of Medical Sciences. These bring over 120,000 international students to the city, many of whom stay on for a few years after graduation to work for firms based in the MSC.

I spoke with Sharfaraz Habib, a Bangladeshi national who studied electronics and telecommunications in Cyberjaya between 2004 and 2008 on a scholarship from national giant Telekom Malaysia, who also owns Multimedia University. Habib said that he "loved the serene atmosphere, the quiet neighbourhoods, and the nature", describing the city as having "a landscape of hills and forests, interspersed with modern facilities".

For Habib, Cyberjaya was a good place for foreigners because the city was full of international students and foreign knowledge workers at the regional headquarters of some of the globe's multinationals like Ericsson (telecommunications), Shell (petroleum) and DHL (logistics). When questioned on the origins of these foreigners, Habib said that most hailed from Middle Eastern, South Asian and Southern African countries. While he has now resumed life in his native Dhaka as per his scholarship regulations, he would readily return to Cyberjaya for work, saying that the city is "very attractive" due to the living conditions and good opportunities.

A regional trend

Many fast-growing cities across Asia show similar trends: booming urban economies driven by industry, and increasingly the service sector. For many, pursuing knowledge industries is seen as a next-phase growth strategy following on from 30-odd years of development baesd on heavy industry and manufacturing. China's unveiling last year of its innovation-led 12th five-year plan is emblematic of this change and has helped to cement this region-wide direction.

Along with Kuala Lumpur, though often less successfully, other cities in the region are seeking to implement specific programmes for knowledge-based development. Ho Chi Minh for instance, Viet Nam's largest city, with a current population of around nine million, expected to hit about 14 million within the next ten years, and responsible for over 20% of the country's GDP. Growth in both manufacturing and service industries has been high since the early 1990s (hovering around 10% per annum), but with growth in manufacturing falling below the national average since the late 1990s, Ho Chi Minh' focus has shifted towards providing higher value-added products and services, especially in IT, agrotechnology, banking, education and tourism.

Not without some challenges however. A recent report from Harvard's Kennedy School on the competitiveness of Vietnamese cities analyses what it considers key challenges to Ho Chi Minh's capacity to fully transition into knowledge-intensive, higher value-added industries. These include a significant shortage of skilled labour, an unclear and ineffective regulatory system, extensive counterfeiting and ongoing concerns over the competence and honesty of local government. Many cities in the region share Ho Chi Minh's difficulties.

No opportunity without risk

Like Ho Chi Minh City, many governments are recognising the considerable skills shortages in their local labour markets which hamper growth in knowledge sectors. This largely explains Kuala Lumpur's MSC policies regarding foreign knowledge migrants. This is also the case in Singapore, where an extensive programme for what the city calls "foreign talent" is in place. This includes fiscal and housing incentives, as well as very light immigration regulations, but only for foreign talent that will boost Singapore's key growth sectors in services, finances and information. However, unlike Singapore and the MSC, Ho Chi Minh is saddled with inefficiencies, according to the Harvard report, making recruitment of both domestic and foreign migrants in these sectors difficult. So while a few cities in the region can formulate and maintain explicit policies catering for foreign knowledge workers to boost growth, the majority are pushing ahead less effectively.

In 2012, for the first time, Asian cities topped certain global lists measuring and ranking the attractiveness of cities. With the increased attractiveness of the region's cities comes an increased opportunity for cities to recruit in specific talent areas for selected industries. Asian cities would do well to consider their increasing pull on global labour markets and seize this opportunity to support identified sectors with clear strategies.

However as cities transition towards knowledge-based economies careful attention needs to be paid by both municipal and central governments to the multitude of long-term implications and questions that arise: what is the role of the foreigner in these cities, and how does the role of domestic knowledge workers differ? How multicultural do Asian urban societies want to become? Should foreign migrants work for short stints or stay for the long term? Indeed, do Asian city governments even want foreign nationals in their labour pools, and to what extent are they willing to globalise their local markets? Wider social issues must be addressed. Knowledge-based development is already bringing with it the slow exclusion of lower-skilled workers, foreign or otherwise. Recent research, for example, into Cyberjaya's housing sector reveals an almost complete absence of affordable housing. Realtors there blindly claim that the market will determine demand for cheap housing and in the absence of such demand continue to build for demographics which generate higher returns, namely knowledge workers — and above all, the foreign ones.


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